The FHFA or homeowners in a large class action can allege that every home that lost an unreasonable amount of value was falsely inflated.
Appraisal methodology never considered depression era models. This is what the suit could be based on for bad mortgages currently held by Fannie and Freddie. Everyone should just cooperate and come to a solution either allowing underwater homeowners who have never missed a payment to refinance or some kind of principal reduction or some combination.
After somewhat fixing this past debacle, then we can move on to how to make sure this never happens again as the NCUA did with the credit union network.
In the future, appraisals should not use sales prices as a barometer of value. Appraisals need to have some methodology that places an actual intrinsic value on a home. With an appraisal model based on the intrinsic value of a home, the banks would then self regulate* and slow down lending when prices start getting falsely inflated. They would no longer have the option to sell mortgages with falsely inflated appraisals to the GSE's. Fannie and Freddie and FHA aren't going to buy garbage mortgages anymore. Lenders can make their own underwriting decisions knowing this.
* Isn't self regulation a Republican ideology?
Appraisal methodology never considered depression era models. This is what the suit could be based on for bad mortgages currently held by Fannie and Freddie. Everyone should just cooperate and come to a solution either allowing underwater homeowners who have never missed a payment to refinance or some kind of principal reduction or some combination.
After somewhat fixing this past debacle, then we can move on to how to make sure this never happens again as the NCUA did with the credit union network.
In the future, appraisals should not use sales prices as a barometer of value. Appraisals need to have some methodology that places an actual intrinsic value on a home. With an appraisal model based on the intrinsic value of a home, the banks would then self regulate* and slow down lending when prices start getting falsely inflated. They would no longer have the option to sell mortgages with falsely inflated appraisals to the GSE's. Fannie and Freddie and FHA aren't going to buy garbage mortgages anymore. Lenders can make their own underwriting decisions knowing this.
* Isn't self regulation a Republican ideology?